Auditing for Businesses Promoted by the Board of Investment (BOI)

The Board of Investment (BOI) is responsible for promoting and supporting investment to drive national economic growth by offering tax incentives to attract both Thai and foreign investors to invest in targeted industries. This helps promote business development and expansion, which reduces costs and increases the competitiveness of businesses both domestically and internationally, enabling smoother and more efficient investment. Companies wishing to invest and apply for investment promotion from the BOI will receive the following benefits:

1. Tax Benefits
Companies promoted by the BOI are entitled to tax benefits such as exemption or refund of corporate income tax, exemption from customs duty on imported machinery and raw materials, and other investment-related tax deductions.

2. Investment and infrastructure support:
Facilitating various permit applications, supporting technology and innovation development, and linking with national development projects and special economic zones.

3. Build credibility and increase business opportunities
giving the company a good image to investors, venture capitalists and financial institutions, which will increase opportunities for business expansion and fundraising.

4. Promote human resource development and management
by providing projects to support labor skills development and help companies manage effectively to support long – term growth.

5. Promote sustainable development
by supporting businesses that emphasize the use of clean technology, environmental management and social responsibility, helping companies move towards sustainable development.

           Upon receiving an investment promotion certificate from the BOI, a BOI audit is required. This audit examines the conditions for applying for benefits to the Board of Investment (BOI) for consideration and approval of the company’s tax utilization. A BOI audit is, therefore, a fact-based audit and reporting process. The report is based on facts discovered during the operation based on mutually agreed-upon procedures. This procedure aims to allow the company to submit an application for corporate income tax exemption to the BOI for consideration and approval of the company’s tax utilization. The application must be completed by a certified public accountant (CPA). The company must provide complete information for the audit and prepare a report requesting investment promotion, including financial statements prepared in accordance with financial reporting standards to ensure the reliability of the financial information. The audited financial report must also be submitted on time for consideration and follow-up on benefits. Therefore, it is the accounting department’s responsibility to prepare the application for benefits to the BOI, including:

• Audited financial statements, including the statement of financial position, statement of income, cash flow statement (if any), along with the auditor’s report.
• Reports on operating results and the use of benefits, such as reports on the use of tax benefits and investment project documents.
• Supporting accounting documents, such as tax invoices, tax certificates, and documents regarding fixed assets.
• Report forms and documents notifying changes to business as required by the BOI.
• Documents prepared for special audits (if any).

Accounting department must be careful when requesting BOI investment promotion privileges:

• Ensure the accuracy and completeness of financial information and avoid recording errors or hidden information.
• Strictly comply with BOI terms and conditions to avoid losing privileges.
• Communicate and cooperate with certified public accountants transparently and completely.
• Submit reports and documents to BOI on time and promptly notify any changes to important information.
• Prepare for special audits by gathering clear evidence and documents.
• Maintain professionalism and ethics in accounting, act honestly and responsibly.

BOI auditing means examining accounting and compliance with tax laws for businesses receiving BOI investment promotion privileges. The key principle is to clearly separate accounts for income and expenses related to privileges (BOI) and those not related to privileges (NON-BOI). This allows for accurate management and reporting to the BOI. This requires a rigorous accounting system, the use of technology, and an understanding of relevant laws to maximize the benefits received.

Key principles in auditing for businesses applying for BOI privileges

• Separating BOI and NON-BOI accounts.

The most important thing is to clearly separate income and expenses that are under BOI privileges from those that are not under BOI privileges.

• Preparing an appropriate chart of accounts.

The chart of accounts must be designed to support such account separation.

• Establishing a document system and internal control.

Having a clear document system and good internal control are essential for collecting and verifying data.

• Recording accounts and averaging income/expenses.

There must be a guideline for averaging income and expenses for BOI and NON-BOI portions correctly according to the criteria.

• Knowledge and understanding of privileges.

Must understand the privileges received and the conditions for exercising the privileges, such as exemptions from import duties on machinery and raw materials, including exemptions from corporate income tax. Should study information about the privileges and conditions of the promotion certificate received in detail to be able to conduct accounting correctly and receive the maximum benefit.

• Reporting to the BOI.

Preparing reports and submitting tax form as specified by the BOI and the Revenue Department.

Auditing businesses applying for BOI privileges is more complex than general businesses because they must comply with several related tax laws, such as the Revenue Code, Customs law and BOI law. Therefore, BOI auditing is an important step for businesses that have received investment promotion certificates to report their operating results transparently and legally. Compliance with the requirements and maintaining the accuracy of the information will help businesses to continuously maintain their BOI privileges, as well as build credibility and sustainability in the long term.

Author: Ms. Kotchaporn Neamhuttee

Dharmniti Auditing Company Limited

Reference:

1. Announcement of the Board of Investment No. Por. 11/2567 regarding the amendment to the attached documents of the announcement on the criteria and procedures for auditing BOI-promoted projects applying for corporate income tax exemption benefits, for certified public accountants.

2. Tax Incentives for Investment Promotion issued by the Thailand Board of Investment under the Investment Promotion Act B.E. 2520 (1977), www.boi.go.th.

3. News from the Federation of Accounting Professions titled “Accountants and SMEs Receiving BOI Promotion”, issued by the Federation of Accounting Professions. www.tfac.or.th.

4. FAQ – 108 Questions on Investment Promotion, www.faq108.co.th.